As I said in another thread, U3 SD cards in such a large quantities are $1-2 (if that) for 32GB up to $4-5 for 128GB. U3 is rated at minimum reading speed of 30MB/s, which is about what PS5's BD reads at.

So yeah, they could've made that physical card that requires install to be other option instead of GKC, with current high speed game cart as more expensive option.

It's only expensive because it uses more durable XtraROM.

But, that doesn't have to be the case.

Do we have any data on how much cost would differ?

The problem is that third parties ultimately choose how they want to package their games, and as we've seen even on Switch 1, they often tend to cut corners to maximise their profit margins, like using a smaller card that contains only part of the game, or even going with a code-in-a-box.

My main complaint to the whole storage situation is the very limited support for "normal" micoSD cards on Switch 2.

They cost only 1/4 of the microSD express cards and would be ideal for tighter budgets:

It would be great when Switch 1 games could be played from normal microSD-cards on Switch 2, loading times would be a lot faster anyways than on Switch 1. The SD-card controller of the Switch 1 didn't support the faster read speeds of newer microSD cards (now up to 200 MB/s) and the slow CPU also slowed it down.

A PS5 can play PS4 games directly from USB/SATA-devices. An Xbox Series can play XBO games directly from USB/SATA-devices. 

And if digital downloads (eShop games + "game key card" games) could be stored on a cheap microSD-cards with a transfer option to the internal storage to play them, big downloads wouldn't be such a big problem.

Both PS5 + Xbox Series allow storing PS5/XBS games on a slower USB/SATA-devices. You can't play them from there, but you can transfer them to SSD when needed without a re-download / internet connection.

Look at the price of a USB Flash Drive or MicroSD cards.
You can get a 128GB drive for around $8.25 for a USB drive.
Or $6.29 for a 128GB MicroSD card.
For what it's worth you can also buy a 128GB SSD for $13.99.

All off Newegg USA.

They all use commodity NAND Flash, it's really only the controller, form factor and grading that differs. - The SSD being the more complex device due to the more complex controller and SLC caching.

So a 128GB of NAND can actually be LESS than the $10 price rise of Nintendo games.

The easiest and best solution would be that third parties compress the data and put the whole game on a proper game card.

What annoys me the most about this recurring discussion is that so many of you start with the premise that third parties cannot possibly do the above and therefore we must think about multiple extra steps to arrive at a better solution than what third parties are doing now, yet this new solution is still tremendously inferior to doing it the right way.

Yes, a Switch 2 game card is more expensive to produce than a Switch 1 card , so this necessitates that Switch 2 owners are willing to pay more for games now. This may sound like a risky situation for third parties, but this potential problem was already solved before it could become a problem. Nintendo themselves raised their own game prices and set the new standard to accomodate for the higher production costs of Switch 2 game cards.

If this was an option, you'd still have third parties cheaping out and deciding that even the $6 it would cost them for a MicroSD card was a corner they could cut.

It's the publisher's call how a game is delivered and many have shown that even when presented with options they will choose the cheapest one even if it's bad for the consumer, as we saw in the myriad of code-in-a-box releases or games only half on the card on Switch 1.

Rol is correct; this is on third parties.

The problem is 3rd parties are already charging more for games for game-key-cards, same price as Nintendo full physical games. The price also caused PS5 games to jump up. Nintendo created a monster lol.

Not really. Game-key cards aren't selling well, so you merely need to have patience.

This is similar to how the narrative has been that digital is the future and then more and more indie game developers looked into releasing physical versions of their games on Switch 1. Eventually the bigger third party publishers will realize that having a physical version on its own will already generate a lot of positive interest in their games. They are going to hamfist the game-key card for Switch 2's first year, but it's not going to work.

GKCs are Nintendo's doing, not 3rd party publisher's.

Wouldn't be much better that if instead of them there was slower "game install required" cards on much cheaper media, so that there is actual choice between (something like) premium Game Cartridge (current game cards), Game Cart (install required) and Digital, instead of current Game Cart, GKC (which is glorified Digital) and Digital?